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EVE Online Rocked by 700 Billon ISK Scam
Martin Spamer writes "The space MMOG EVE Online, where mining rock plays a big part of the economy, has recently been hit by a huge in-game scam. The aftermath of the EIB scam... was 700 Billion ISK, which might raise some $119,000 USD if sold on Ebay. (The current conversion rate is 100M ISK to 18 USD.) These events have prompted claims of player deaths, death threats, and speculation about What Would You Do With 700 Billion ISK?"
Can someone explain the scam? The forum link has very little information and presumes the reader has background...
It may be the biggest scam in Eve so far, but it has far less flair that some of the others. Plus, the perptrator was a prick :-(
Trade it for a frist post, of course.
There's like 30 forum posts I can find googling about the EIB scam. but I can't find anyone talking about what it is. Just some dude named Cally screwed a lot of people, and apparently it was legit because of voting or something?
All I have to say is kudos for getting this story on slashdot since I don't even believe we can call it news. Let's try to at least explain the random stuff we are putting together, or at least keep the topics on stuff a little more mainstream then Eve if we don't want to spend the time actually putting an explination of the facts together.
Details can be found here and here Scammer used basic Ponzi scheme - set up a bank that gave interest on investments. Used new investments to pay off interest. Eventually, like all pyrmid schemes, it run out of investors so scammer cashed out and made "I won Eve" video. This worked since there are quite a few legitimate buisness in EVE, mostly pawnshops for T2 BPO's, that give good returns.
The 'Eve Interstellar Bank' was essentially a pyramid scheme masquerading as an in-game Investment Bank. It payed a dividend that steadily rose from around 9% a month to 16% to build confidence then when the investments stopped coming in closed shop.
It's interesting to watch all the scams that go on in Eve, I consider it a great social experiment.
There are three main features of Eve that create this situation.
1. Easy-to-use player run capitalist system. (It's easy for anyone to start up and manage a business)
2. Zero laws against corporate fraud (As pure as capitalism gets)
3. Anonymity from victims. (It's a lot easier to rationalize ripping off people in a virtual world.)
Combined together these factors have lead to some amazing corporate frauds and espionage.
I don't have time/effort myself to invest in Eve, but it's still fun to read what determined Eve players go to lengths to achieve.
(A thought occured to me while typing this. Someone should offer some sort of contract in Eve. Either it can be done through CCP with GMs backing it and they could even charge for it, or a sufficiently large and militarized corporation could sell contract enforcement. Maybe this has already been done, otherwise feel free to steal this idea and try to make some isk with it.)
If this signature is witty enough, maybe somebody will like me.
EVE Online has an incredible economy that would be very good training for real world brokerage. Therefore it doesn't surprise me that the same scams as occur in real life could occur in EVE. I guess a lot of the scams that people pull off in real life from pyramid schemes, MLMs, ponzis, insider trading etc. could all have their counterparts on EVE. The moral of this tale, is don't be dumb enough to fall for them in the first place. Anything that looks too good to be true, is too good to be true.
...the scam was your basic Ponzi scheme.
Get investors to your "bank" and pay them a high rate of return on their investments.
Use your "success" to get bigger investors. Use their capital to pay out your early investors.
Get more even bigger investors. Use their capital to pay out most of your investors.
As soon as you think you can't widen the parymid, close up shop and keep all of the investors money.
http://en.wikipedia.org/wiki/Ponzi_scheme
Personally I think this is what makes the game EVE more facinating than others.
I hope the guys running it don't step in, but rather I hope the players can in-game construct an appropriate response to the guy.
It'll be very interesting to see if this springs up new insurance companies in EVE to protect against it -- or perhaps a new type of organization to certify banks -- or, etc. In EVE the possiblities seem endless.
The damn thing is just a treadmill. You mine stuff, get money, mine stuff, get money, buy some mining stuff, mine stuff, get money...
Boring as hell. Space is an empty wasteland and so is this game.
One of the interesting aspects is that the person who pulled the scam said so, publicly. And said who his main character is. One of the flaws in the game is that in theory, he could have transferred this money to another character he owned and been utterly untracable. But he came out and said 'I did it, these were the handful of characters I used, this is my main who I always play with'.
More interesting, he's set a bounty on himself of 1.2 bil and gone out looking for fights. (You collect the bounty if you blow up his ship, then catch his pod and blow that up too. A little tricky, but not impossible.) With 700bil in the bank, he can afford pimpin' ships and the best gear, and not worry about when he loses them. He's already been found and podded once (by some members of the Mercenary Coalition, if anyone's curious), not sure if he's going to keep bountying himself. Given his attitude, I suspect he will, since he's looking for a fight and pvp experience.
But it's basically 'yay i win eve'.
Gonzo Granzeau
"Nothing the god of biomechanics wouldn't let you into heaven for.." -Roy Batty
Won't the Admins just zero out the fraudster's "bank account" and be done with it?
Nope -- There's nothing against scamming other players like this in the rules. It is part of the game.
The appalling dearth of PvE and story-driven content in EVE bores me. Plus it seems that "you learned your lesson, don't be so stupid in the future" is kind of a worthless thing to say to someone when you can potentially be busted down to next-to-nothing for making one little mistake, making it next to impossible to get back to where you used to be in anything resembling a reasonable amount of time.
+++ATH0
What good would that do? All the customers of his bank already lost their money. Also, if he already ebayed off the money to many other players, then it doesn't do any good. Returning all the money to their original owners doesn't seem feasible either, he had to have thousands of clients (you try going through a years worth of server logs :).
I play eve.
Phase 1: Cally opens up EIB and does an IPO on it. Many people get excited, lots of people invest, lots more people begin to store saving there.
Phase 2: Cally builds reputation and Bank starts to seem like one of the cornerstones of Eve's burgeoning investment market. To this day it's not clear how much of that was legitimate and how much was pyramid goodness.
Phase 3: A character named Currin Trading runs a scam and makes off with 30 billion ISK (the largest scam ever at the time)
Phase 4: Word gets out that Currin Trading was a scam, Currin Trading posts a very long explanation of the whole scam and ends it with another shocking revelation: EIB is also a scam! He recognizes all the signs because it's so much like his own scam.
Phase 5: Forum drama.
Phase 6: Insane forum drama.
Phase 7: Cally's faked a) hospitalization, b) incarceration c) death in very short sequence.
Phase 8: EIB is revelaed to be a scam, Dentara Rast is revelaed to be Cally's main (players can have up to three character per account) much gloating occurs. He puts a billion ISK bounty on his own head and goes out to fly PVP with the most expensive ships and equipment he can find (in Eve, if your ship blows up you lose it entirely).
Phase 9: Slashdot!
It should be noted that scams are an accepted part of the Eve game mechanics. Eve is ruthelessly PvP in combat and in the marketplace. It seems as though this was an entirely legitimate (in an EULA sense of the word) scam and that Dentara Rast will get off free and clear.
I have a lot of opinions about Cyborgs and Architects
But then again most of tech stocks before the bubble burst were essencially Pyramid schemes. The only way to make money off of them was to sell before the bubble burst and leave someone else holding the bag.
For a non EVE player, the What Would You Do With 700 Billion ISK? thread makes absolutely no sense. What is a GTC or a BPO? I guess the same goes with WoW lingo.
What Would You Do With 700 Billion ISK? Two chicks at the same time. Darn straight. Two chicks at the same time.
"Combined together these factors have lead to some amazing corporate frauds and espionage."
Yup. The virtual world is becoming more like the real one.
This is a nice summary of it:
c urrintrading.fortunecity.com/bank.html+even+interg alactic+bank&hl=en&ct=clnk&cd=1&client=safari
http://72.14.207.104/search?q=cache:bgYN8yiLK88J:
I disagree. The thing to keep in mind is that laws doesn't equal government. Laws can be more subtle than that.
Not on YouTube yet? Unless my searching skills are to blame, it's a bit surprising. I was about to upload it myself but I don't really care about that whole story...
You just got troll'd!
This could be construed as "income from a barter exchange" by the IRS. EvE should send him a 1099-B form at the end of the year, showing that as income. In the words of the IRS:
The Internet has provided a medium for new growth in the bartering exchange industry. This growth prompts the following reminder: Barter exchanges are required to file Form 1099-B for all transactions unless certain exceptions are met. Refer to Barter Exchanges for additional information on this subject. IRS tax topic "Bartering income
This is a very real issue, because there are active markets for converting ISK to dollars and back. There are buyers, sellers, quotes, and services that track price trends. That's not an "informal exchange of services on a noncommercial basis", which the IRS doesn't tax. That's a non-dollar credit, which the IRS converts to US dollars at prevailing rates and does tax. The numbers here are big enough to attract IRS interest.
I am not an eve player, but from what I read, this does not appear to be a technical exploit, or a violation of the terms of service, or anything like that.
... but basicly "A pyramid scheme is a non-sustainable business model that involves the exchange of money primarily for enrolling other people into the scheme, usually without any product or service being delivered." This is basicly the same scam as Amway and other multi-level marketing scams (and the same model most government social insurance programs are based on).
This was basicly an in-game version of a pyramid scheme or ponzi scheme. You can read about pyramid schemes here http://en.wikipedia.org/wiki/Pyramid_scheme
Apparently the scam was run IN-GAME... meaning that this wasn't a real life scam that will get someone thrown in prison in real life - Financial scamming appears to be legal gameplay in Eve, the same way it is not a crime to attack other players in the game.
That's how I've scanned most of this too, although in much more detail as I've never done any Eve "Banking" and won't until Contracts. All above board "in the EULA sense" as banking cannot be done without this kind of risk with current Eve mechanics. You either give something to someone to do with what they will or you don't.
I'm looking forward to Contracts though, should make some things lots easier. =)
This occurs regularly in Eve, this just happens to be the latest incarnation (the title of "rocks" is way overblown, 99.9% of players in Eve won't even know or care). The basic "problem" in Eve is that there are no enforced laws on corporate behavior. No SEC or FTC. Therefore, it's almost a certainty that any venture that requires joint ownership and capital will ultimately end up in fraud. It's a great study for both libertarian and regulatory economists alike. Although some people may relish the prospect of no government regulation, the problem is that no grand projects of joint capital are possible (they do happen, but they are always under a cloud of suspicion and will ultimately fall to greed in most cases). This means there are no truly reliable avenues of investment (there is also no FDIC for joint ventures). For those who are going to point out that you can buy shares in X venture currently in game, wait awhile.
Also, imagine the work it takes for one person to run a scheme of this size, dealing constantly with investments, withdrawals, and dividends. Sure, it racks up a lot of cash, but the perpetrator probably had to "play" 23/7 for six months to pull it off, constantly dealing with minutiae. So, yes, well done in terms of a scam, but it takes a hell of a lot of work. Is 700 billion units of virtual cash worth it? Maybe, when you consider how much it could be transferred into real currency if he bought time cards with ISK and sold them.
However, here another economic curiosity comes into play - the number of people selling time cards is a limited number (you cannot buy time cards from CCP with ISK, someone has to pay CCP real money and then put them up for sale in ISK). Cashing out would spike the sell price of time cards in *ISK* through the roof. He would have to deal both the minutiae of buying and with selling hundreds if not thousands of time cards, which would also drive the cost of time cards down *in real currency*.
Basically, when you figure it all out and divide the final take in real currency by time spent to do the scam and then transfer it all, I doubt the hourly pay is impressive. So, sorry folks, no get rich quick scheme here.
Yahoo says 100M ISK is more than 1,420,000 USD. But that may be an other ISK... ;)
Hah... anyone else notice the reference to Frontier: Eite?
See; http://www.jades.org/missions.htm
'The basic "problem" in Eve is that there are no enforced laws on corporate behavior. No SEC or FTC.'
Is the game robust enough for players to create such laws and enforcement/oversight groups?
Vincent J. Murphy
Spandex Justice
Not really. The most you can punsish someone would be consistently trying to blow up their stuff quickly so they don't have any fun, or maybe trying to isolate them socially. But there's enough space/people in the EVE universe to make both of those infeasible, and even if you could accomplish them enough to annoy the person, they could always just leave and go play WoW or something instead.
That would get rid of the person maybe (they could always create a new-anonymous character and get him/her the money), but that still wouldn't get anyone their money back.
One time I threw a brick at a duck.
Interesting. Dentara Rast is the name of a famous assassination target in Frontier: First Encounters.
Oolite: Elite-like game. For Mac, Linux and Windows
To understand why this is a scandal in EVE. The game environment is almost designed to encourage things like this, in my experience. Now, I grant you, I didn't play very long, but this game is about as free for all as MMORPGs come right now. This guy connived 700B ISK out of people. Well, boo hoo, but you shouldn't give ISK to someone you don't personally know won't rip you off.
Boring. Repetitive. Encourages griefing. Oh yeah sign me up for a double helping of that.
The more i hear about this game the less i want to play it.
The only thing necessary for the triumph of evil is that good men do nothing.
I think you make a great point. As these MMORPGs become more complicated and begin to mimmick the complexity and social needs of reality, you start to see where the inherent design of the game breaks down.
What's interesting is whether or not those involved in the scam would have just as easily perpetrated it face-to-face with players, whether if something of this nature happened in real life, it could have gone as far, and what that says about people and their virtual lives. Do you trust more in your fake world than you do in your real one? Do you expose the dark side of your nature more in your fake world than the real one? Are these games turning into training grounds where people can fine tune behaviors and social patterns that have legitimate reasons for being repressed?
All good questions that in order to be answered would require people to be a lot more introspective than they presently are. I'll leave you to thumb through this forum, in order to determine if that's the case.
I think that's the biggest problem with this kind of scam -- at least IRL, you can't just leave (well, not without a fair amount of effort, anyway).
Just junk food for thought...
I was under the impression, having travelled to Iceland a while back, that ISK = Icelandic Kronur, i.e, their native currency, not EVE's. When I was over there, it was pretty much exactly 100ISK = 2CAD, which means 14 billion CAD was ripped off. Confusing title.
The scammer states his bank worked by lending big chunks of capital to bank employees, (other real players). They would pay back the capital plus 10% to him, and keep whatever extra they made on top of that for themselves. So the scammer needn't play 23/7, simply manage these employees.
However it is true that such is the slack in the market in Eve you will make more money proportional to the extra time you put in. It's a game after all, most people buy or sell at the asking price to save time in order to have more fun, so there's always a margin.
There's no sanction in terms of the reputation of the character, since the scammer can buy a character from the forums which is similarly spec'd to his current character, and character transfers are guaranteed.
It's possible the contracts system will mitigate risk. Characters will have a contracts history like in eBay, so a 100% good feedback will be worth something. But of course if it's worth something, it can be sacrificed for greater gain...
The appalling dearth of PvE and story-driven content in EVE bores me. Plus it seems that "you learned your lesson, don't be so stupid in the future" is kind of a worthless thing to say to someone when you can potentially be busted down to next-to-nothing for making one little mistake, making it next to impossible to get back to where you used to be in anything resembling a reasonable amount of time.
It's an MMO game. The point is that taking a 'reasonable amount of time' is contrary to the design philosophy, because then people would stop p[l]aying, and the content-to-profit ratio would require serious adjustment. Back in the beta, I was hoping they'd break through the MMO singularity and create a viable system for runaway player content creation, but it's still not even close, despite fun little emergent artifacts like viable pyramid schemes.
"We have to go forth and crush every world view that doesn't believe in tolerance and free speech." - David Brin